The Central government’s The Model Tenancy Act, 2019, the draft of which has been put out for public consultations, is an important piece of legislation that promises to ease the burden on civil courts, unlock rental properties stuck in legal disputes, and prevent future tangles by balancing the interests of tenants and landlords. Young, educated job seekers migrating to large metropolises such as Mumbai, Bengaluru, Delhi and Mumbai often complain of onerous tenancy conditions and obscene sums of money as security deposits that they are asked to fork out to lease accommodation. In some cities, tenants are asked to pay security deposits amounting to 11 months of rent. Also, some house owners routinely breach tenants’ right to privacy by visiting the premises unannounced for sundry repair works. Whimsical rent raises are another problem for tenants, many of whom complain of being squeezed as “captive customers”.
It’s not as if landlords have nothing to groan about. Tenants are often accused of “squatting” on the rented premises, or trying to grab the property. “Occupancy is two-thirds ownership,” cynics have long said, given the difficulty in ejecting errant tenants who either quit paying rent or cite old rent-freezing rules in refusing to allow even inflation-attuned hikes. It’s little wonder that property has been a matter of much dispute across the country. This has resulted in a distorted market for rental property in many cities, with low supply of earlier-built spaces.
The proposed legislation is a “model law”, as land is a state subject and states may or may not adopt these rules. This new law proposes to cap security deposits at two months of rent for residential properties. It also provides for the setting up of a rent authority to be headed by an officer of deputy collector rank. The authority will have a website to host the details of rent agreements. The landlord will be required to give a three-month notice to the tenant before raising the rent. If adopted by Indian states, the law would have them set up rent courts and tribunals, as civil courts will no longer hear lessor-lessee disputes. Further, it intends to impose hefty penalties on squatters. If the law is able to bridge a trust deficit between owners and tenants, it would help turn the tenancy market dynamic. That would be a good thing.